Post navigation

Profit – an end to a means?

“Our culture must be one where the interests of customers and clients are at the very heart of every decision we make; where we all act with trust and integrity.”

Much has been made of these comments over the last couple of days, and how the LIBOR-fixing scandal has made a mockery of his words.

While there can be no doubt that Barclay’s behaviour in fixing LIBOR rates has not put their customers and their clients at the heart of their decision making, I find myself more depressed at the limited scope for good – even in this, what should have been Diamond’s most aspirational address. Diamond gave plenty of good examples of CSR, and ways that Barclays could contribute to society while also continuing a relentless drive for its own profitability; but surely there must be a real debate at this stage about the viability of organising society around businesses driven primarily by profit.

It’s a concern that is not limited to Barclay’s by any means – indeed most blue chip companies would take a similar view of their purpose: Delighting customers and producing value for shareholders. The traditional argument says that the role of business to fuel economic growth, and this helps society by creating jobs and wealth.

There is truth to this – and it is not surprising that the financial system has produced hermeneutic knowledge to justify its behaviour. What is left out of this narrative however is that in pursuit of growth, this capitalist system has also produced a range of negative unintended side-effects whose consequences now significantly outweigh the positives produced by economic growth.

Klaas Van Egmond has articulated the obvious, in highlighting capitalism’s “tendency to reverse ends and means”. He suggests the financial system has become an end in itself, rather than being the means it should be to further human happiness and social value.

What is truly frightening is how embedded this topsy-turvy capitalist narrative is. Even this week Bob Diamond has been praised for masterminding a “British corporate success story”. National newspapers are peddling the argument that he should stay because he would be too difficult to replace.

Just why are we putting such value on his job?

Barclays exists today, to enrich itself, and by so doing (it would say), improve society. We need to re-imaging Barclays, and every major business so that they exist to improve society, and in so doing enrich themselves in a sustainable way.

If Diamond was leading on organisation that thought and acted in that way; then maybe, just maybe you could begin to fathom his £17 million annual pay packet. As it stands, I find myself slack-jawed as people formulate arguments for continuing to pay a man 649 times the average wage in Britain so that he can continue to increase the profitiability of an investment bank without thinking beyond his immediate “customers and clients”.